Under existing law and regulations, plan fiduciaries have to consider the long-term viability of an insurer before including their products in an investment menu. The new safe harbor would shift that onus to insurers. (Photo: Shutterstock)
For years prior to the passage of the Pension Protection Act of 2006, sponsors of defined contribution plans were aware of automatic enrollment's potential to vastly improve retirement plan design.
But adoption of the feature was relatively slack, notwithstanding the persuasiveness of behavioral economics research correlating auto-features with higher participation rates in retirement plans.
“Sponsors were hesitant to adopt automatic features because they worried they would be considered as illegal garnishments of wages in some states,” explained Bob Melia, executive director of the Institutional Retirement Income Council. “That sounds ridiculous now, but it was true at the time.”
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
